Calls grow for HMM to merge with SM Line

Calls grow for HMM to merge with SM Line

Two of South Korea’s top containerlines must merge or risk becoming the next ‘Hanjin’, according to the vice chairman of the Korea Shipowners Association (KSA).

In an interview with the local Aju Business Daily, Kim Young-moo warned European liners were dominating the container sector, operating like “cartels”, and Korean liners needed to bulk up in order to compete or face the fate of Hanjin, which went bankrupt in January last year.

20-month-old SM Line became a major container carrier in South Korea by acquiring the transpacific routes from Hanjin. The company has since launched a series of joint routes with domestic partners on intra-Asia trades. SM Line is owned by Samra Midas Group, a company best known for its construction background, which also owns dry bulk outfit Korea Line Corp.

“We should consider a merger between HMM and SM Line,” Kim said in an interview with Aju Business Daily. “We will be able to compete with cartelised European shipowners if we can quickly increase our loading capacity, reduce various costs, and streamline our routes through mergers.”

According to Alphaliner statistics, HMM is the world’s 10th largest liner with 412,000 slots while SM Line ranks 19th with around 90,000 slots.

Kim, previously secretary general at the KSA, has been a vocal backer of greater mergers and joint ventures ever since Hanjin sought court protection. He is believed to be instrumental in the launch of a pan-Korean alliance on the intra-Asia trades.

Kim said the previous government had made a mistake not merging Hanjin with HMM before it was too late.

Last week HMM denied rumours carried in the local press that the company is looking to take over the transpacific portfolio from SM Line.

Local media had reported that the Ministry of Ocean and Fisheries had made plans to consolidate all long-haul container shipping services into one platform in an effort to reduce competition among local containerlines.

When contacted by Splash, a spokesperson for HMM denied the news reports.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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2 Comments

  1. Avatar
    Paul Ellis
    October 22, 2018 at 5:35 pm

    How very rich for Kim Young Moo to criticise the European lines as “cartelised” when he represents a country artificially supporting both its box lines and shipyards with government subsidies, in contravention of IMF and WTO guidelines.

    A case of the pot calling the kettle?

  2. Avatar
    V. Han
    October 27, 2018 at 2:22 am

    Yes, MSK got $520,000,000 from Danish Government, Hapag $1,800,000,000 from GOV and 750,000,000 from Hamburg city. CMA got $ 150,000,000. Need more?